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To: Leslie Tack who wrote (2819)	7/2/1999 11:06:00 AM
From: Ted M	Read Replies (1) \| Respond to of 3576

Friday July 2, 6:56 am Eastern Time FOCUS-Russia and IMF agree new economic reform plan By Peter Henderson MOSCOW, July 2 (Reuters) - Russia has agreed a blueprint and timetables for economic reform in a memorandum to the International Monetary Fund, Kommersant newspaper reported on Friday, printing what it said was the full agreement. The detailed document, focusing on concrete steps to be taken over the next year or so, is Russia's final set of promises to the IMF, whose board is expected to meet later this month to consider a new loan of about $4.5 billion. Russia agreed to shut troubled banks, let the rouble trade more freely, tighten control over its free-spending bureaucracy and force monopolies and off-budget funds, the black holes of the economy, to publish Western-style accounts. The central bank and government set targets for raising foreign currency reserves to buffer the rouble and a plan for servicing Russia's $150 billion foreign debt, payments on which this year total 90 percent of planned revenues. In return Russia would receive Fund credits and its blessing for putting off some payments, paving the way for rescheduling talks with other creditors, according to the agreement. The accord would mark a watershed for Sergei Stepashin, Russia's second new prime minister since the state effectively devalued the rouble and defaulted on the its rouble debt last August, sending the economy reeling. Though Russia's agenda includes macroeconomic goals such as slowing inflation, it is heavy on detailed reforms to improve the business climate which many economists now say is the major hurdle stopping Russia from attracting long-term investment. Two major areas of such microeconomic reform include making the work of major government-controlled companies more transparent and cleaning up the banking sector, still inefficient 10 months after the rouble collapsed. ''The government of the Russian Federation and the central bank will carry out wide ranging structural reforms necessary for strengthening key parts of the market economy and liquidate bottlenecks hindering economic growth,'' the memorandum as printed by Kommersant said. The Fund, which showed its concern over past deals by requiring Russia to explain how loans were used, was so detailed as to require six of the top 18 banks be shut and to name major companies required to publish Western-style accounts next year. Past agreements with the Fund have fallen apart, and Russia has never shown strong economic growth despite billions of dollars of IMF support and nearly a decade of post-Soviet attempts to reform. The new plan forecasts a sobering two percent contraction in gross domestic product this year and a slowing in annual inflation to 50 percent. Year on year inflation in May was 116.6 percent. The cautious Fund has required that a number of measures, especially legislative changes and revenue-raising steps, be put in place before agreeing a credit, and it will not give cash. Russia stands to get $4.5 billion over 18 months, but the credits will never really leave the IMF, being used to pay old debt coming due. That will free up resources for Russia but give it no opportunity to squander or squirrel away Fund cash.